Fairfax files for IPO on Canadian insurance companies

Fairfax Financial Holdings Ltd. says a preliminary prospectus for an initial public offering (IPO) of common shares of Northbridge Financial Corp., a Canadian insurance holding company, has been filed.Northbridge would then become the holding company for Fairfax’s Canadian insurers Lombard, Commonwealth, Markel and Federated.As of December 31, 2002, the combined companies of Northbridge had total assets of $3.26 billion and shareholders’ equity o f$562.8 million. The only debt is a small non-recourse mortgage on a real estate, the company reports. Last year, the group saw gross written premiums of $1.78 billion, an overall combined ratio of 97.4%, and an average return on equity of 10.3%.Current Lombard president Byron Messier is set to step up as CEO of Northbridge.”Fairfax believes that this offering will allow its Canadian subsidiaries to take advantage of the growth opportunities available to them in the improving Canadian insurance marketplace, thereby realizing benefits similar to those which accrued to Fairfax’s Odyssey Re subsidiary following its IPO in 2001,” states a Fairfax release.The funds from the IPO will be used by the parent Fairfax for “general corporate purposes, which may include normal course repurchases in the market of its outstanding shares”.